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Business Combinations | 6 Months Ended
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Jun. 30, 2020
Business Combinations [Abstract] |
Business Combination | NOTE 2 – BUSINESS COMBINATIONS On December 31, 2019, Oriental purchased from the Bank of Nova Scotia (“BNS”) all outstanding common stock of Scotiabank de Puerto Rico for an aggregate purchase price of $550.0 million, subject to settlement amounts as described herein. Immediately following the closing, Oriental merged Scotiabank de Puerto Rico with and into Oriental Bank, with Oriental Bank continuing as the surviving entity. As part of this transaction, Oriental Bank also acquired the U.S. Virgin Islands banking operations of BNS through an acquisition of certain assets (including loans, ATMs and physical branch locations) and an assumption of certain liabilities (including deposits) for their net book value plus a $10.0 million premium on deposits which were settled as part of the final consideration from the acquisition. In addition, Oriental acquired certain loans and assumed certain liabilities, from BNS’s Puerto Rico branch for their net book value which were settled as part of the final consideration from the acquisition. The assets acquired and liabilities assumed as of December 31, 2019 were presented at their fair value. In many cases, the determination of these fair values required management to make estimates about discount rates, expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. The fair values initially assigned to the assets acquired and liabilities assumed were preliminary and subject to refinement for up to one year after the closing date of the acquisition as new information relative to closing date fair values became available. During the six-month period ended June 30, 2020, the Company recorded remeasurement adjustments to the preliminary estimated fair values of certain accrued interest receivable that have not been received and accounts receivables to reflect new information obtained during the measurement period (as defined by ASC Topic 805), about facts and circumstances that existed as of the acquisition date that, if known, would have affected the acquisition-date fair value measurements. As detailed in the table below, the adjustment occurred in accrued interest receivable, deferred tax asset, and other assets acquired. The adjustment resulted from the fair value determination of certain accrued interest receivable of loans accounted for under ASC 310-30 and from the receipt of funds from BNS for certain intercompany transactions.
| December 31, 2019 |  | Measurement |  | Fair Value
|  |  |  | Fair Value |  |  |  |  | Period |  | as
| Book Value |  | Adjustments, net |  | Fair Value |  | Adjustments |  | Remeasured
| (In thousands) |  |  |  |  |  |
Cash and cash equivalents | $ | 492,512 |  | $ | - |  | $ | 492,512 |  | $ | - |  | $ | 492,512
Investments |  | 576,319 |  |  | (102) |  |  | 576,217 |  |  | - |  |  | 576,217
Loans |  | 2,237,337 |  |  | (21,134) |  |  | 2,216,203 |  |  | - |  |  | 2,216,203
Accrued interest receivable |  | 7,722 |  |  | (2,952) |  |  | 4,770 |  |  | 5,540 |  |  | 10,310
Foreclosed real estate |  | 8,636 |  |  | (352) |  |  | 8,284 |  |  | - |  |  | 8,284
Deferred tax asset, net |  | 37,606 |  |  | 22,335 |  |  | 59,941 |  |  | (2,078) |  |  | 57,863
Premises and equipment |  | 10,866 |  |  | (1,068) |  |  | 9,798 |  |  | - |  |  | 9,798
Servicing asset |  | 40,258 |  |  | 206 |  |  | 40,464 |  |  | - |  |  | 40,464
Core deposit intangible |  | - |  |  | 41,507 |  |  | 41,507 |  |  | - |  |  | 41,507
Customer relationship intangible |  | - |  |  | 12,693 |  |  | 12,693 |  |  | - |  |  | 12,693
Other intangible |  | - |  |  | 567 |  |  | 567 |  |  | - |  |  | 567
Operating lease right-of-use assets |  | 15,452 |  |  | 4,011 |  |  | 19,463 |  |  | - |  |  | 19,463
Other assets |  | 86,016 |  |  | (6,507) |  |  | 79,509 |  |  | 410 |  |  | 79,919
Total identifiable assets acquired |  | 3,512,724 |  |  | 49,204 |  |  | 3,561,928 |  |  | 3,872 |  |  | 3,565,800
Deposits |  | 3,028,066 |  |  | (2,607) |  |  | 3,025,459 |  |  | - |  |  | 3,025,459
Operating lease liability |  | 16,317 |  |  | 2,091 |  |  | 18,408 |  |  | - |  |  | 18,408
Accrued expenses and other liabilities |  | 87,309 |  |  | - |  |  | 87,309 |  |  | - |  |  | 87,309
Total liabilities assumed |  | 3,131,692 |  |  | (516) |  |  | 3,131,176 |  |  | - |  |  | 3,131,176
Total identifiable net assets |  |  |  |  |  |  | $ | 430,752 |  | $ | 3,872 |  | $ | 434,624
Bargain purchase gain |  |  |  |  |  |  |  | 315 |  |  | 3,872 |  |  | 4,187
Total consideration |  |  |  |  |  |  | $ | 430,437 |  | $ | - |  | $ | 430,437
Merger and Restructuring Charges Merger and restructuring charges are recorded in the consolidated statement of operations and include incremental costs to integrate the operations of Oriental and its most recent acquisition. These charges represent costs associated with these one-time activities and do not represent ongoing costs of the fully integrated combined organization. These costs were recorded in merger and restructuring charges within the consolidated statement of operations. The following table presents severance and employee charges, systems integrations charges, and other merger and restructuring charges, related to the Scotiabank PR & USVI Acquisition, for the quarter and six-month period ended June 30, 2020:
| Quarter ended June 30, |  | Six-Month period ended June 30,
| 2020 |  | 2020
| (In thousands) |  | (In thousands)
Severance and employee-related charges | $ | (104) |  | $ | 33
Systems integrations and related charges |  | 3,056 |  |  | 3,142
Other |  | 54 |  |  | 135
Total merger and restructuring charges | $ | 3,006 |  | $ | 3,310
Restructuring Reserve Restructuring reserves are established by a charge to merger and restructuring charges, and the restructuring charges are included in the merger and restructuring charges table. The following table presents the changes in restructuring reserves for the quarter and six-month period ended June 30, 2020:
| Quarter ended June 30, |  | Six-Month period ended June 30,
| 2020 |  | 2020
| (In thousands) |  | (In thousands)
Balance at the beginning of the period | $ | 14,948 |  | $ | 17,491
Merger and restructuring charges |  | 3,006 |  |  | 3,310
Cash payments |  | (1,566) |  |  | (4,413)
Balance at the end of the period | $ | 16,388 |  | $ | 16,388
Payments under merger and restructuring reserves associated with the Scotiabank PR & USVI Acquisition are expected to continue into 2020 and will be under applicable accounting guidance to the cost being incurred.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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